UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ፤ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 31, 2003. OR ፬ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 1-15829 FEDEX CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 62-1721435 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 942 South Shady Grove Road Memphis, Tennessee 38120 (Address of Principal Executive Offices) (ZIP Code) Registrant's telephone number, including area code: (901) 818-7500 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $.10 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ፤ No ፬ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ፬ Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.) Yes ፤ No ፬ The aggregate market value of the voting stock held by non-affiliates of the Registrant, computed by reference to the closing price as of the last business day of the Registrant's most recently completed second fiscal quarter, November 29, 2002, was approximately $14.4 billion. The Registrant has no non-voting stock. As of July 7, 2003, 298,503,301 shares of the Registrant's common stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's definitive proxy statement to be delivered to stockholders in connection with the 2003 annual meeting of stockholders to be held on September 29, 2003 are incorporated by reference in response to Part III of this Report. TABLE OF CONTENTS PART I Page Item 1. Business 4 Item 2. Properties 26 Item 3. Legal Proceedings 30 Item 4. Submission of Matters to a Vote of Security Holders 31 Executive Officers of the Registrant 31 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 34 Item 6. Selected Financial Data 35 Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition 36 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 63 Item 8. Financial Statements and Supplementary Data 64 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 64 Item 9A. Controls and Procedures 64 PART III Item 10. Directors and Executive Officers of the Registrant 65 Item 11. Executive Compensation 65 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder 65 Matters Item 13. Certain Relationships and Related Transactions 65 Item 14. Principal Accountant Fees and Services 65 PART IV Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 66 FINANCIAL STATEMENTS Report of Ernst & Young LLP, Independent Auditors F-1 Report of Arthur Andersen LLP, Independent Public Accountants F-2 Consolidated Balance Sheets—May 31, 2003 and 2002 F-3 Consolidated Statements of Income—Years ended May 31, 2003, 2002 and 2001 F-5 Consolidated Statements of Changes in Stockholders' Investment and Comprehensive Income—Years ended F-6 May 31, 2003, 2002 and 2001 Consolidated Statements of Cash Flows—Years ended May 31, 2003, 2002 and 2001 F-7 Notes to Consolidated Financial Statements F-8 2 FINANCIAL STATEMENT SCHEDULE Report of Ernst & Young LLP, Independent Auditors, on Financial Statement Schedule S-1.1 Report of Arthur Andersen LLP, Independent Public Accountants, on Financial Statement Schedule S-1.2 Schedule II—Valuation and Qualifying Accounts S-2 EXHIBITS Exhibit Index E-1 3 PART I Item 1. Business Introduction FedEx Corporation ("FedEx") is a leading global provider of transportation, e-commerce and supply chain management services. Services offered by FedEx companies include worldwide express delivery, ground small-package delivery, less-than-truckload ("LTL") freight delivery, global logistics, supply chain management and customs brokerage, as well as trade facilitation and electronic commerce solutions. FedEx offers its integrated business solutions through a portfolio of operating companies, including: • Federal Express Corporation ("FedEx Express"). FedEx Express is the world's largest express transportation company, offering time-certain delivery within one to three business days and serving markets that comprise more than 90% of the world's gross domestic product. • FedEx Ground Package System, Inc. ("FedEx Ground"). FedEx Ground is North America's second largest provider of business and residential money-back-guaranteed small-package ground delivery service. FedEx Ground provides low-cost residential delivery to nearly 100% of U.S. residences through its FedEx Home Delivery service. • FedEx Freight Corporation ("FedEx Freight"). FedEx Freight is the largest regional LTL carrier in the U.S. and the market leader in providing next-day and second-day regional LTL freight services. • FedEx Custom Critical, Inc. ("FedEx Custom Critical"). FedEx Custom Critical is North America's largest surface-expedited carrier, offering non-stop, time-specific, door-to-door delivery of time-critical and special-handling shipments within the United States, Canada and Europe. • FedEx Trade Networks, Inc. ("FedEx Trade Networks"). FedEx Trade Networks facilitates global transportation and logistics services by providing full-service customs brokerage, trade advisory services, information technology, e-clearance and air and ocean freight forwarding solutions. • FedEx Corporate Services, Inc. ("FedEx Services"). FedEx Services comprises the consolidated sales, marketing and technology support for FedEx Express and FedEx Ground and offers extensive supply chain management solutions through its FedEx Supply Chain Services, Inc. subsidiary. FedEx was incorporated in Delaware on October 2, 1997 to serve as the holding company parent of FedEx Express and each of our other operating companies. Through our holding company and FedEx Services, we provide strategic direction to, and coordination of, the FedEx portfolio of companies. We believe that sales and marketing activities, as well as the information systems that support the extensive automation of our services, are functions that are best coordinated across subsidiary lines. Through the use of advanced information systems that connect the FedEx companies, we make it easy and convenient for our customers to use the full range of FedEx services. By competing collectively under the FedEx banner, our operating companies benefit from one of the world's most recognized brands. FedEx is one of the most trusted and respected brands in the world, and the FedEx brand name is a powerful sales and marketing tool. 4 Among the many reputation awards we have received since the beginning of 2003 are the following: • Ranked highest in the J.D. Power and Associates 2002 Small Package Delivery Service Business Customer Satisfaction StudySM in the categories of air, ground and international delivery services. • Received the United Way of America's 2003 "Spirit of America" Award, which honors our national corporate involvement and commitment to building better communities. • For the second consecutive year, ranked eighth on FORTUNE magazine's list of "America's Most Admired Companies" and in the top ten of FORTUNE's "World's Most Admired Companies" list. • Ranked twelfth in "corporate reputation" on The Wall Street Journal's Harris Interactive/Reputation Institute RQ Gold Survey. • Listed among FORTUNE's "100 Best Companies to Work for in America," a list that we have made every year it has been published. • Included in FORTUNE's list of the "50 Best Companies for Minorities." • Ranked highest in customer satisfaction in the University of Michigan Business School National Quality Research Center's American Customer Satisfaction IndexTM in the parcel delivery category. Along with a strong reputation among customers and the general public, FedEx is widely acknowledged as a great place to work. It is our people—our greatest asset—that give us our strong reputation. In addition to superior physical and information networks, FedEx has the best human network anywhere, with more than 216,500 employees and contractors who will do "absolutely, positively" whatever it takes to serve our customers. Our Web site is located at fedex.com. We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to such reports available, free of charge, through our Web site, as soon as reasonably practicable after they are filed with or furnished to the SEC. These and other SEC filings are available through the Investor Relations page of our Web site, the address of which is http://www.fedex.com/us/investorrelations. The information on our Web site, however, does not form part of this Report. For financial information concerning our reportable business segments, refer to Note 13 of the accompanying audited financial statements. Except as otherwise specified, any reference to a year indicates our fiscal year ended May 31 of the year referenced. FedEx Operating Strategy Our strategy is to have focused operating companies that excel in each segment of the global transportation and logistics marketplace and to create synergies across companies through coordinated sales and marketing programs enhanced by state-of-the-art information technology.